Zimbabwe close to deflation

via Zimbabwe close to deflation – Southern Eye by Victoria Mtomba

THE ZIMBABWE economy is close to deflation due to the stagnancy and decline in prices as consumer spending continues to weaken, it has emerged.

Local economist Tony Hawkins said the country is witnessing what the Japanese went through in the past having no price increases at all or witnessing price decline.

Deflation is a decrease in the general price level of goods and services.

“This shows that the economy is weakening. Firms are trying to move goods off the shelf as the cost of keeping the inventory will cost them either from their suppliers or from banks where they have borrowed, ”he said.

Confederation of Zimbabwe Industries president Charles Msipa said the reduction in prices was a sign of correction as most of the commodities in this economy were highly priced since the country adopted the multi-currency system in 2009.

“There is a painful correction with regards to prices. When we dollarised we did not peg our prices properly. We did not value and price goods correctly despite the fact that we were using the United States dollar,” Msipa said.

A snap survey by our sister paper NewsDay, showed that a number of companies including Schweppes, Nestlé Zimbabwe and Edgars had reduced the prices of some of their products.

On the other hand furniture stores such as TV Sales and Hire were running promotions which allow customers to buy furniture at 0% deposit, but payable over six months on the same amount and applying to products that cost $300.

MMC Capital researcher Kudzanai Samudzi said the decline in the prices of commodities was a sign that producers were trying to entice customers to purchase their products despite the liquidity challenges in the economy.

“The waning demand in the economy is because there is no liquidity in the economy. Producers are chasing few amounts of money in consumers’ pocket to get something. For instance if a company’s mark up for a certain product was 40% or so, it would not be attractive instead they will reduce it to entice customers,” he said.

 

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8 comments on “Zimbabwe close to deflation
  1. Kalusha says:

    I love my country but it is very expensive

  2. Old Man River says:

    About time too. We were ripped off for years by businesses that had no competition (and how they squealed when reasonably priced imports became available). Always quick to raise prices; always got an excuse not to reduce them. Anybody notice any price reductions as the ZAR weakened against the US$?

  3. BLESSING says:

    QUIET RIGHT ZIMBABWE IS TOO EXPENSIVE,OVER PRICED!$100-00 IN AMERICA BUYS YOU ONE FULL SHOPPING TROLLEY.$100-00 IN ZIMBABWE BUYS YOU ONE OR TWO SHOPPING BAGS.THIS IS THE DIFFERENCE.WE NEED MORE S.A. SUPERMARKET CHAINS IN ZIMBABWE TO COMPETE WITH PICK N PAY.COMPETION IS GOOD.

  4. John Thomas says:

    This is not deflation and there is no danger of it. Markups have been far too high for very many years. This is simply an open market starting to benefit consumers. Robertson and others who might say otherwise are simply arguing the side of their profiteering clientele

  5. Michael says:

    This is what happen in a country where the government (can’t really call the current regime a government) continually interferes in the economics free market enterprise. Get rid of Mugabe regime and thing will improve, allow foreign direct invest and not indigenize and things will improve.

  6. munzwa says:

    Will professional services charges be dropping?

  7. sunshine says:

    Munzwa how can professional services drop their prices when other sectors of the economy wont. Be realistic we have to live too.

  8. Emperor says:

    To the Writer of this funny Article

    If you think there is deflation than go in any Restaurant or Supermarket and ask yourself if there is any deflation, and let me know when you
    finally have found it.

    Hahaha!

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